March 20, 2018 / 12:38 PM / 6 months ago

Improving Swiss watch exports to help mood at Basel trade fair

ZURICH (Reuters) - A recovery in Swiss watch exports picked up pace in February, data showed on Tuesday, a shot in the arm for brands grappling with how to stay relevant to younger buyers and set to unveil their latest models at a trade show this week.

FILE PHOTO: Visitors arrive at the Baselworld watch and jewellery fair in Basel, Switzerland March 17, 2016. REUTERS/Ruben Sprich/File Photo

Shipments of Swiss watches rose by 12.9 percent year-on-year in February, according to the Swiss watch industry federation, a tad better than a month earlier - helped in part by a weak performance last February - and confirmed optimism for 2018 from major watchmakers such as Swatch Group.

Swiss watchmakers are emerging from a downturn after sales to China crashed following a corruption crackdown in 2012.

FILE PHOTO: A visitor looks at watches at the Baselworld watch and jewellery fair in Basel, Switzerland March 22, 2017. REUTERS/Arnd Wiegmann/File Photo

These are now recovering, fueled by demand from a young generation of Chinese shoppers sustaining a rebound for luxury fashion firms too.

But the watch industry is still getting to grips with how to revive demand for some of its products, including the cheapest ranges of timepieces facing competition from smartwatches or even mobile phones as customers lose their watch habit.

And U.S. sales remain broadly weak, even if exports to the three biggest markets for Swiss watchmakers, Hong Kong, the United States and China, all recorded double-digit increases in February.

Watch exports reflect what brands ship to retail partners — not what they actually sell to consumers — so the improvement is only a glimpse into the broader market, suggesting that stock levels in watch stores are normalizing and retailers are confident enough to place new orders.

But Swiss watchmakers are still expected to strike a more upbeat tone when they meet in Basel from Thursday for the Baselworld watch and jewelry fair.

“Sentiment is positive in general and trends look healthy in China,” RBC analyst Rogerio Fujimori said, adding however that the pick-up in the United States should not be overegged.

He pointed to strong figures published last week by Hong Kong retailer Emperor Watch & Jewellery Ltd. (0887.HK) that suggested that sales to consumers are also improving.

Other underlying challenges also included a gradual switch from stores to e-commerce, Fujimori added.

The future of the Basel show itself will likely be fodder for conversation too this year. Many small and mid-sized brands will not be present, put off by high costs, and a few top players have joined January’s rival Geneva fair instead.

Reporting by Silke Koltrowitz in Zurich and Sarah White in Paris; Editing by Alison Williams

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